Why Tenable Holdings Rallied on Monday

Shares of Tenable Holdings (NASDAQ: TENB) rallied on Monday, up 6.7% on the day, and extending a massive 100%-plus run since the stock's bottom back in April.

Tenable was initially caught up in the software "SaaS-pocalypse" this year following the release of Anthropic's Claude code and its associated capabilities in coding and cybersecurity. Still, it appears the fears over cybersecurity leaders may be overdone, as these companies appear to be deploying leading LLMs within their trusted software architecture, rather than being disrupted by them.

The cybersecurity cohort got another boost today from a Wall Street analyst, who upgraded a group of names in the sector, with Tenable seeing its price target nearly double.

Scotiabank upgrades

On Monday, sell-side analysts Patrick Colville and Joe Vandrick of Scotiabank published a note in which the analysts upgraded a slew of cybersecurity stocks, Tenable among them. The analysts' theory is that the latest artificial intelligence models are so powerful that they will increase cyber threats throughout this year and 2027, forcing companies to increase their cybersecurity budgets.

While information technology research firm Gartner (NYSE: IT) predicts 14.5% growth in cybersecurity spending this year, Colville and Vandrick believe that estimate is conservative. As a result, the analysts increased their price targets on the group of stocks, including Tenable's, nearly doubling it from $26 to $50.

Tenable is a known leader across multiple "surfaces" of modern enterprise IT departments. In fact, Gartner named it "the company to beat" for AI-powered vulnerability assessment just last week. So, Tenable stands to benefit from new and emerging threats across multiple "attack surfaces."

Image source: Getty Images.

Tenable could be a strong comeback story

Despite the recent doubling, Tenable stock still trades well below its all-time highs set in April 2022. Currently, its market cap is just $4.5 billion, with just a 20 forward P/E ratio based on adjusted (non-GAAP) earnings estimates for 2026.

That's still not expensive for a profitable software company growing around 10%, and which could be due for some reacceleration, if Gartner's forecast is correct. Like many of its peers, Tenable faces some disruption risk from generative AI; however, if the company can adapt and harness AI for future growth, shares look very cheap, even after today's bounce.

Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool recommends Bank Of Nova Scotia and Gartner. The Motley Fool has a disclosure policy.